Bulgaria FinMin: No Need to Sell Eurobonds in 2011

"Our calculations show that for covering the deficit in 2011, we don't need any additional financing. We have enough reserves," Finance Minister Simeon Djankov said in Brussels. Photo by EPA/BGNES

Bulgaria is likely to abandon plans to sell bonds on the international market in 2011, deeming outside financing unnecessary after the economy returned to growth, the finance minister has said.

"We will not go to the Eurobond market this year, simply because we ended 2010 with a larger fiscal reserve than forecast," Simeon Djankov said in an interview for Bloomberg agency in Brussels.

"Our calculations show that for covering the deficit in 2011, we don't need any additional financing. We have enough reserves."

The government had planned to sell bonds amounting to EUR 1 B on the international market in 2011 to shore up its finances.

According to Djankov however a pickup in economic growth in the fourth quarter has helped raise revenue and add to fiscal reserves.

Bulgaria is recovering, though sluggishly, from a deep recession, in which it plunged with the onset of the global economic crisis last year.

The economy expanded 2.1% in the fourth quarter from a year earlier, preliminary data of the statistics office showed at the beginning of the week. The country's gross domestic product (GDP) increased by 0.3% in 2010 as a whole, below government forecasts for growth of 0.7%.

After growing by more than 6% in 2004-2008, the Bulgarian economy shrank by 4.9% in 2009, and is expected register a growth around 0% in 2010 (-0.1%, according to a recent forecast of the EC).

The government has vowed to stick to its tight fiscal policy, which means pursuing doggedly its ambition to halve the budget deficit to 2.5% of GDP and aim at growth of 3.6% in 2011.

"We'd like to wait and see what happens in the first three quarters of this year," Djankov said. "If the economy picks up as we have predicted, then outside financing is not necessary."

Unlike its neighbors Bulgarians were spared radical austerity programs, which could help the economy pick up, driven by rising exports and a debt-to-GDP ratio of just about 16%.

Djankov's belt-tightening policy however has repeatedly drawn criticism of creating the illusion of a healthy economy on the back of the people, who are three times poorer than the average EU citizen.

Local analysts and Brussels experts have warned that the cabinet, just like its predecessors, may loosen the purse strings to maintain its popularity ahead of local and presidential polls in the autumn.

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